CFPB Issues Guidance on Illegal “Convenience Fees”

The CFPB issued guidance on navigating "pay-to-pay" debt collector fees, often described as "convenience fees."

As part of its ongoing review of so-called "junk fees," the CFPB published an advisory opinion affirming that Section 808 ("Unfair practices") of the Fair Debt Collection Practice Act's prohibition of fees that are not "expressly authorized by the underlying agreement or permitted by law" extends to convenience fees. According to the CFPB, such fees have been charged under a variety of circumstances, including when a consumer wants to pay by a particular means (e.g., online) and has been imposed even if the payment mechanism is cheaper and more efficient for the debt collector.

The advisory opinion focused on (i) defining the extent of prohibited fees, (ii) affirming that the absence of a law expressly authorizing a fee does not make that fee permitted and (iii) clarifying the role of payment processors.